Nissan’s no panic approach to crisis management
IN A TIME of austerity, CEO pay is a sticky issue most companies avoid if possible – especially if there is wrongdoing. Step forward Carlos Ghosn, who has been arrested for misconduct after allegedly dipping his hands into the cookie jar at Nissan. He and representative director Greg Kelly are being questioned about financial reports going back years, after a whistle-blower prompted an internal investigation.
It seems that for a number of years, Brazilian-born French national Ghosn – who once appeared on the front of a magazine dressed in a kimono, and was hailed as the car company’s saviour – had actually been under-reporting his income to the Tokyo Stock Exchange, as well as misusing company assets, with Kelly’s help.
As the CEO of Nissan, Renault and Mitsubishi, he is one of the car industry’s most powerful bosses, and this news has reportedly wiped 12% from the Renault share price and 11% from Nissan already, prompting a statement from Emmanuel Macron.
Despite this, the news would once have been purely business focused, perhaps confined to specialist press or business programmes. It’s now big news, and hits fast. As I write, the news is trending on Twitter with more than 33,000 mentions of his name and 57,000 mentions of Nissan. It’s a problem that a surprising amount of firms are not prepared for. Nissan, however, have so far provided a masterclass in how to handle a PR disaster.
Shortly after the news broke, they issued a statement acknowledging that the board of directors had failed in their duty of care, which tells me that they followed the first golden rule I always spell out to my clients: have a plan in place before the worst happens. It’s obvious to me that they had all their ducks in a row before the press even got a sniff of the story.
By issuing a holding statement acknowledging that they have made mistakes by allowing these two characters to operate unchecked for so long, my guess is they will be able to mitigate the fallout, at least in the short term. Although time will tell, I have to say it’s a great start.
What they need to do now is follow this up with decisive action, which sadly means more heads will roll – but by doing this they are potentially saving countless jobs on the production line, along with the company’s reputation. Although they can do nothing about the share price for now, hopefully this swift action will go some way to helping this recover faster.
I’ve written before about how, as CEO, you have to fall on your sword when things go wrong – but this applies as much to other members of the board as it does to the chairman. As the saying goes, with great power comes great responsibility. This includes being accountable not only for yourself, but for the other people around the table.
I imagine this will make for more than a few awkward conversations in the Nissan C-suite, and no shortage of sweaty palms, as the investigation progresses.